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WSJ Exposes Conflicts Of Interest Involving Amazon, Pentagon Over $10B JEDI Contract

Published: July 8, 2019
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Source: ZeroHedge

Amazon's surging profits over the past few years have had little to do with the company's core business of selling stuff - or allowing third parties to sell stuff - on its online marketplace. Instead, Jeff Bezos has built Amazon Web Services into a cloud computing behemoth, allowing tens of thousands of companies to outsource their back-end responsibilities.

But after years of explosive growth, AWS' revenue growth has started to slow in recent quarters. Which has made securing a multi-billion-dollar DoD cloud-computing contract all the more important to Bezos & Co. Unfortunately for them, the process for awarding the contract to build the Joint Enterprise Defense Infrastructure, or JEDI, has become embroiled in controversy, as rivals have sued alleging they were unfairly excluded from the bidding.

Pentagon

On Monday, WSJ raised more questions about the influence campaign by Bezos and some of his top executives to win the DoD's favor even before the bidding process for JEDI began. WSJ has obtained a tranche of emails detailing contacts between Amazon and the DoD that the paper said could give the plaintiffs - a group that includes Oracle and IBM - more ammunition to question the bidding process.

 

That's because the emails show that on March 31, 2017, former Defense Secretary Jim Mattis attended a dinner in London with Teresa Carlson, the Amazon executive in charge of selling cloud-computing services to governments. An organizer of the dinner said cloud computing never came up, but still, that meeting helped lay the groundwork for a meeting in August 2017 between Mattis and Bezos.

Emails showed that other Pentagon officials helped connect Carlson with Mattis's chief of staff and other senior Pentagon officials at around the same time.

In response to questions from WSJ, a spokesman for Amazon insisted that AWS received no preferential treatment during the bidding process. The Pentagon defended the process as "open, transparent, and full."

These pre-bid meetings would, at least at first glance, support Oracle's contention that the Pentagon designed the proposal with Amazon in mind.

But there's a more pernicious collusion at the heart of Oracle's lawsuit, filed in the US Court of Federal Claims: The company alleges that a former Amazon employee working at the Pentagon helped guide the deal to favor Amazon, then returned to work at Amazon. The Pentagon has maintained that this employee didn't impact the bidding process.

"It is highly irregular that the Secretary of Defense attended a small, private dinner for 'off-the-record' discussions with an Amazon sales executive," said Kenneth Glueck, who runs Oracle’s Washington office.

Republican Sen. Chuck Grassley even told WSJ on the record that these emails support his belief that the Pentagon should restart the bidding process.

"We shouldn’t have to tolerate conflicts or appearances of conflicts of interest in any government contracting process," Grassley said in a statement.

The contract has already been delayed once as the Pentagon investigated the role of the Amazon employee cited in Oracle's lawsuit. And as pressure mounts from the media and Congress, it's looking increasingly likely that - at the very least - the contract, which was supposed to be awarded in the coming weeks, will be delayed again. It might even result in Amazon being excluded from consideration from the massive contract, which would be a huge blow to Bezos and AWS.

Related Articles:

IN A FEDERAL lawsuit, the tech giant Oracle has provided new details to support its accusation that Amazon secretly negotiated a job offer with a then-Department of Defense official who helped shape the procurement process for a massive federal contract for which Amazon was a key bidder.

Microsoft officials announced Tuesday that the company had achieved the required security levels to host secret U.S. military and intelligence data on its could computer network, Azure, and claimed they were on track to to host “top secret” information soon. The developments put the computer giant in closer competition with cloud rival Amazon to handle the government’s most delicate and important information and perhaps to vie for the Pentagon’s coveted nearly $10 billion cloud contract known as JEDI.

For many years, the cloud quadrille of Amazon’s AWS, Microsoft’s Azure, Google Cloud and IBM SmartCloud has been engaging in rounds of fierce price wars in a bid to dominate both market share and mindshare. The cloud race has also frequently featured a healthy dose of ivory tower jousting and demagoguery.

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